Soaring Mortgage Rates and Home Prices Leave Americans Struggling with Housing Affordability

Rising mortgage rates and home prices are leaving many Americans struggling with housing affordability, according to a recent survey by NewHomesMates.com. Nearly 20% of people pay approximately one-third of their monthly income on mortgages alone, while around 10% spend more than half of it. The average fixed mortgage rate has not dropped below 6.6% this year, which is significantly higher compared to previous years as the market responds to interest rate volatility. Additionally, home prices have increased by 6%, surpassing their level from last January. These factors are making housing unaffordable for many people who already face rising costs in other areas of spending. To cope with these high borrowing and buying expenses, some buyers take extreme measures such as working extra hours or stopping retirement savings altogether. Additionally, over half say they would consider smaller homes or living farther from their workplaces to become homeowners. While housing inventory is improving due to a 5.9% year-on-year increase in new starts and an almost 11% surge in completed construction during February alone according to reports by the Department of Housing & Urban Development, many people are still struggling with affordability concerns as interest rates remain high for now. To combat these challenges, President Biden has called on Congress to invest more than $175 billion into affordable housing initiatives and create legislation that provides a tax credit worth up to $10,000 to first-time homebuyers or those who sell their starter homes during his recent State of the Union address. Prospective buyers should compare different mortgage options from various lenders on Credible’s online marketplace and choose the best rate for them as interest rates continue to fluctuate in response to economic indicators monitored by The Federal Reserve, which may consider cutting interest rates this summer.